OPAP set to unleash its VLTs

OPAP set to unleash its VLTs

Monday, November 28, 2016
Machine roll-out set to be ‘transformational’ for Greek Monopoly

OPAP received an early Christmas present in early November when the Greek regulator finally gave the go-ahead for OPAP to roll-out video lottery terminals (VLTs) after amending the rules to remove fixed limits on time and player spending.

The move from the Hellenic Gaming Commission (HGC) means that OPAP can now unleash up to 16,500 VLT machines on the Greek market. The regulations also allow for a further 18,500 machines to be doled out to sub-concessionaires by OPAP.

OPAP responded to the news from the Gaming Commission by suggesting the long-delayed roll-out would begin in the first quarter of next year. Chief executive Damian Cope said in a statement: "Bearing in mind that the new approved regulation is among the strictest on an international level, the HGC's decision will now enable the legal development of VLTs, and its fully regulated operation can create a new landscape in the gaming market in Greece," 

The M Stanley analysts said the roll out would be “transformational” for the monopoly operator.

“The product is universally popular, and with its almost entirely variable cost base (operating costs and premises leases are borne by agents), we expect it to be profitable almost immediately,” they added.

The analysts believe OPAP will achieve a rollout of 10,000 machines by the end of next year with the full complement achieved by the end of the next year. The estimate that by 2018 the VLTs will add a net €59m to the company’s EBITDA while VLT net revenues will hit €431m by 2018. However, the analysts estimate there will be a circa €10m drop in retail gross win as a result of cannibalisation.

“The product is likely to enjoy a very strong start, with significant pent-up demand in Greece, and the initial round of machines enjoying strong productivity per day,” they added. “We expect it to stabilise at around €80 net win per machine per day by 2020, broadly in line with international precedents in absolute terms, in spend per head terms, and relative to GDP.”

OPAP’s most recent results last week showed revenues in the third quarter rising 6.1% to €319.2m helped by year-on-year growth in lottery counteracting a fall in sports-betting revenues. Revenues in that segment fell 2.6% to €92.5m.

The Morgan Stanley analysts suggested the third-quarter results were flattered by easy comparatives with last year when capital controls were in effect in Greece. “We think the underlying profile looks lacklustre, and given the forthcoming launch of VLTs, we expect Retail EBITDA to continue to decline,” they added.

“VLTs will compete directly with Kino, we think, as customers looking for an instant win product are likely to find the higher payout (circa 90% versus circa 67%), rapid action, wide range of content and bonus rounds more interesting than Kino.”

Totally Gaming says: VLTs are central to OPAP management’s vision for the company in four years’ time and the company will be more than happy that the long delayed VPT launch has finally been given the green light. Still, all eyes will now be on what the new machines means for the existing business in the shops, particularly the lottery/kino products but also sports-betting.

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